DRW and Other Firms Embrace High-Frequency Bitcoin Trading

Oct 23, 2017

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A large Chicago-based proprietary stock trading firm, DRW, has embraced bitcoin trading over stock trading. DRW has pivoted in accordance with shifting trends in the economy and in the fintech sector. Traditional stocks do not move like cryptocurrencies, and the higher volatility of bitcoin markets means larger gains. Other companies have also dove into the gold rush of bitcoin trading.

A Financial Timesarticle expanded on DRW’s Foray into the crypto space: “DRW of Chicago, one of the world’s largest proprietary trading companies, has led the charge. About a dozen of its more than 800 employees buy and sell bitcoin at a subsidiary named Cumberland Mining, which was established in 2014.”

Multiple Firms Follow the Tide

DRW has not been the only company to lunge into the digital currency ecosystem. Several major firms are interesting in capitalizing on the growing bitcoin markets. Names include Jump Trading, DV Trading and Hehmeyer Trading + Investments, according to the Financial Times article. The Chief Executive of DV Trading commented on their interest in the space:

The volatility in asset classes is at all-time historic lows — everywhere except for cryptocurrencies. So there’s obviously a lot of interest in this space.

The Financial Times article mentioned even though the stock markets are trading at an all time high, they only record a few daily moves of 1%, whereas the crypto markets were up 6% on Friday.

DRW in for the Long Haul: Silk Road Bitcoin Purchase

DRW appears to be in the cryptocurrency and bitcoin trading market for the long haul. They invested early in bitcoin when they purchased 27,000 bitcoins in March of 2015 in a government auction. The coins were originally apprehended from Ross Ulbricht in the Silk Road case.

“DRW has long-term holdings of cryptocurrencies, giving it stocks to be able sell to buyers. In March 2015, it bought 27,000 bitcoins that the US government had confiscated in a case involving a drug marketplace called Silk Road, according to a report by Coindesk. Worth $7.6m at the time of the auction, the sum would now be valued at about $160m.”

Overall, DRW and similar trading firms believe bitcoin and cryptocurrency are here to stay. They see the market as continuing to grow well into the future, and thus they have rejected most criticisms of bitcoin. In this sense, they appear to be not only embracing bitcoin, but are starting to understand the protocol and its implications for the future of financial technology.

What do you think about all of these large trading firms getting into bitcoin trading? Will it help ignite a large scale movement for mass bitcoin adoption? Let us know in the comments section below.

Images courtesy of Shutterstock and Chopper Trading

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